TBEN’s Jim Cramer on Thursday warned investors not to buy beaten-up shares of video game companies like Activision Blizzard and Take-Two interactive software just.
“I’m not saying they’re done falling at this point – I definitely think they have more downsides – but at some point they’ll be cheap enough to be worth buying. It’s just that we’re not there yet are,” he said.
Some of the other names to keep an eye out for include sony, amd, Microsoft and Nvidiasaid Cramer.
Video game companies saw their inventories skyrocket during the height of the Covid pandemic, as consumers pulled back and turned to home entertainment. That changed when the economy reopened, leading to an explosion of outdoor activities.
“In other words, life is too short to play video games at home, or at least that’s what many consumers seem to think right now,” Cramer said.
He added that the companies are also weighed down by reliance on digital advertising revenue streams, which have seen a downturn as the Federal Reserve raised interest rates to slow the economy.
Nevertheless, the headwinds facing the video game industry are likely to ease, though it’s unclear when, Cramer said.
“While the video game industry came out of 2022 looking like one of the biggest losers…I think it could turn out to be a temporary problem, not a permanent one. It’s too early to start bottom fishing here, but eventually there will be a bottom,” he said.